The Mac Observer

Skip navigational links

You're viewing an article in TMO's historic archive vault. Here, we've preserved the comments and how the site looked along with the article. Use this link to view the article on our current site:
The Reasons Behind Apple's Stock Decline

The Reasons Behind Apple's Stock Decline

by , 2:25 PM EST, January 24th, 2008

Apple reported healthy growth in its Q1 Earnings Report, and it's hard to find fault with any aspect of its business. Even so, Apple's stock has declined for three reasons, according to Stan Beer at ITWire on Thursday.

The market was expecting great holiday quarter results from Apple, so Apple merely met expectations. However, several factors have contributed to a depressed stock price.

"What the market is reacting to, however, are three things," Stan Beer wrote. "a lack of any new killer products or announcements at Macworld 2008, a lack of belief that Apple can sustain its breakneck growth rate, and last but not least a very real fear that Apple, being a luxury consumer goods provider at the premium end of its market, will be hit by what is now believed to be an inevitable economic downturn in the U.S."

By contrast, in 2007 customers were expecting big things from Apple based on the Macworld 2007 announcement of the iPhone. Sales of the iPhone and its successful competition against the legacy vendors drove the stock to near US$200.00.

The Macworld 2008 keynote was not so spectacular. "Comparing Macworld 2008 to Macworld 2007 was like comparing chalk and cheese. Like the iPhone, the ultra slim MacBook Air was predicted months in advance but few cared. Everyone knew it was going to be a premium priced product that would have no great growth effect on Apple's business," Mr. Beer noted.

There is also concern that with a possible downturn in the U.S. economy, the 3G iPhone will be greeted with indifference. "APPL shares have dropped because at their present level of around $139 with a PE of more than 35, investors want earnings growth to continue at the breakneck speed of 2007 if they're going to pay a premium for the stock, "Mr Beer concluded. "...and they're uncertain as to whether Apple can achieve that in the coming year."

iPO notes that a gloomy atmosphere often tends to put Apple's achievements and prospects in a tainted perspective. There's no sign that Apple is letting up in any of its business areas, and an iPhone announcement in a Macworld keynote only happens once in a lifetime.

Recent TMO Headlines - Updated September 23rd

Fri, 7:02 PM
The Intriguing Design of The Steve Jobs Theater Explained
Fri, 5:45 PM
Anki OVERDRIVE Adds Fast & Furious Edition
Fri, 5:15 PM
iVAPO Folio Case for the 10.5-inch iPad Pro is a Delight: A Review
Fri, 5:05 PM
Terminal Tinkering: Say Hello to TMO's New Podcast for Tech Enthusiasts
Fri, 4:25 PM
Apple Posted Apple Pay How To Videos on YouTube
Fri, 3:43 PM
Movie Rentals in iTunes Have Changed for the Better
Fri, 3:00 PM
The Royal iPod Has Been Spotted For The First Time
Fri, 2:29 PM
Thanks to Misuse, Apps Can't View MAC Addresses on iOS 11
Fri, 1:28 PM
Go Behind the Scenes with Apple's iPhone Pre-order War Room
Fri, 1:20 PM
Setting Up Your New iPhone and Apple Watch, Terminal Tinkering Debut - TMO Daily Observations 2017-09-22
Fri, 11:46 AM
Blips Smartphone Lens Kits: $24.99
Fri, 11:20 AM
iPhone 8 and 8 Plus Top DxOMark Camera Ranking
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!